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EU Support for Governance in Egypt – “well-intentioned but ineffective”, say EU Auditors

Court of Auditors - ECA/13/18   18/06/2013

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EUROPEAN COURT OF AUDITORS

PRESS RELEASE

ECA/13/18

Luxembourg, 18 June 2013

EU Support for Governance in Egypt – “well-intentioned but ineffective”, say EU Auditors

A report published by the European Court of Auditors (ECA) is highly critical of EU aid spending to promote key areas of governance in Egypt in the periods before and after the Uprising of January 2011. “The ‘softly softly’ approach has not worked, and the time has come for a more focused approach which will produce meaningful results and guarantee better value for the European taxpayers’ money” stated Mr Karel Pinxten, the ECA member responsible for the report.

The audit focused on Public Finance Management (PFM) and the fight against corruption on the one hand and human rights and democracy on the other hand.

For the period 2007-2013 approximately € 1 billion in aid was allocated by the EU to Egypt. As more than half of this amount is channelled through Egypt’s treasury, using the aid mechanism known as budget support, considerable reliance is placed on the country’s PFM.

The Commission and the European External Action Service (EEAS) failed to ensure that the Egyptian authorities tackled major weaknesses in PFM. Lack of budgetary transparency, an ineffective audit function and endemic corruption were all examples of these undermining weaknesses. The Commission and the EEAS did not react to the lack of progress by taking decisive action to ensure accountability for considerable EU funds, which continued to be paid directly to the Egyptian Authorities.

Similarly, little progress was achieved by EU interventions in support of human rights and democracy. The main human rights programme was largely unsuccessful. It was slow to commence and was hindered by the negative attitude of the Egyptian authorities. The Commission and the EEAS did not use the financial and political leverage at their disposal to counteract this intransigence. Some elements of the programme had to be dropped completely. Funds channelled through Civil Society Organisations (CSOs) were not sufficient to make a discernible difference.

Following the Uprising no new major initiatives were taken to tackle key human rights issues and the measures taken have had little impact to date. Women’s and minorities’ rights were not given sufficient attention in the Review which followed, despite the critical need for urgent action to counter the tide of growing intolerance.

Notes to the editors:

European Court of Auditors (ECA) special reports are published throughout the year, presenting the results of selected audits of specific EU budgetary areas or management topics.

This special report (SR 4/2013) is entitled “EU Cooperation with Egypt in the Field of Governance”. The ECA assessed whether the European Commission and the European External Action Service (EEAS) managed effectively the EU support to improve governance in Egypt before and after the 2011 Uprising. The report contains many illustrative findings that show how EU aid has not been effective in improving governance.

Public Financial Management

Lack of budget transparency and accountability

  • Important areas of the budget are not transparent. Military expenditure is not declared and there is also no information on presidential expenses (see § 47(a)).

  • The Egyptian authorities hold at least 36 billion Egyptian pounds (approximately € 4 billion), equivalent to 2,4 % of Egyptian GDP, outside the state budget in so-called ‘Special Funds’. Their exact size is unknown, as are the purposes for which, and the way in which, they are used (see § 47(b)).

  • No progress has been made in reforming external auditing. The Central Auditing Organisation (CAO), the Supreme Audit Institution in Egypt, reported directly to President Mubarak and its audit reports are largely secret. The CAO’s lack of reform and transparency is a serious impediment to improving PFM (see § 47(c)).

Despite Egypt’s serious problems in the area of corruption, the EU aid has done little to directly address this issue. Some EU budget support programmes in other countries have included specific conditions on corruption, but this was not the case in Egypt. It should also be noted that the Commission is the only donor providing budget support to Egypt.

Human Rights and Democracy

A key feature of the Association Agreement between the EU and Egypt is its insistence on the respect of democratic principles and fundamental human rights. This reflects the EU’s long standing commitment to promoting human rights and democracy in its international relations as enshrined in article 21.1 of the Treaty on European Union.

The main programme was beset by problems, many of which were due to lack of commitment from the Egyptian Authorities:

  • 30 months after signature of the Financing Agreement only 22% of the Funds had been spent (§ 29(b));

  • a major component (€ 4 million) for enhancing Civil Society Organisations’ capacity was cancelled (§ 29 (c)).

Since the Uprising, the rights of minorities are increasingly under threat, sectarian violence has been on the rise with Christians suffering the brunt of the violence. Investigations into the violence have been sluggish or non-existent.

Regarding the rights of women, the new Parliament, following the Uprising, called for the abolition of several institutions supporting women’s rights. It also demanded a reduction in the age of marriage, the decriminalising of Female Genital Mutilation and a review of the Personal Status Law and Child Law in line with Sharia principles (see § 63 of the report).

Recommendations

Virtually all the recommendations of the Court’s report (§ 80 to 82) have been accepted by the Commission and the EEAS.


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